Goodwill MCQ
What Is Goodwill :- Goodwill is also known as an intangible asset linked with the acquisition of one business by another. Goodwill is a condition where the purchase payment is higher than the worth of all the intangible and solid visible assets acquired in the possession.
The worth of a firm’s solid customer base, good customer relations, brand name, patents or proprietary technology, and good employee relations are some examples of goodwill.
21. Which of the following is not true in relation to Goodwill-
(a) It is an Intangible Asset
(b) It is a Factious Asset
(c) It has a realisable value
(d) All of these
Answer- (b) It is a Factious Asset
22. As per Accounting Standard(AS ) 26 Goodwill will be recorded in the books of accounts-
(a) Purchased Goodwill
(b) Self generated Goodwill
(c) Purchased Goodwill and Self generated Goodwill
(d) None of these
Answer- (a) Purchased Goodwill
23. Super profit means-
(a) More than normal profit
(b) Less than normal profit
(c) Average profit+Normal Profit
(d) None of these
Answer- (a) More than normal profit
24. Methods of valuation of Goodwill –
(a) Average profit Method and Weighted average profit method
(b) Super profit Method
(c) Capitalisation of Average profit Method and Capitalisation of Super profit Method
(d) Annuity Method
(e) All of these
Answer- (e) All of these
25. A firm earns a profit of 26,000 and has invested capital amounting to 2,20,000. In the same business normal rate of earning profit is 10%. Calculate the value of goodwill with the help of Capitalisation of super profit method. Value of goodwill ?
(a) 26,000
(b) 4,000
(c) 40,000
(d) 2,60,000
Answer- (c) 40,000
26. The capital invested in a firm is 4,60,000 and the rate of return in the similar business
is 10%. The firm earns the following profit in the last 4 years:
2018 – 70,000
2019 – 90,000
2020 – 80,000
2021 – 1,00,000
Calculate the value of goodwill by Capitalisation method. Value of goodwill ?
(a) 85,000
(b) 39,000
(c) 3,90,000
(d) 3,40,000
Answer- (c) 3,90,000
27. The capital invested in a firm is 4,60,000 and the rate of return in the similar business
is 10%. The firm earns the following profit in the last 4 years:
2018 – 70,000
2019 – 90,000
2020 – 80,000
2021 – 1,00,000
Calculate the value of goodwill by Capitalisation method. Value of goodwill ?
(a) 85,000
(b) 39,000
(c) 3,90,000
(d) 3,40,000
Answer- (c) 3,90,000
28. Capital employed ?
(a) Total assets – Liabilities
(b) Total assets =Liabilities
(c) Total assets +Capital
(d) Total assets(Excluding goodwill) – Liabilities
Answer- (d) Total assets(Excluding goodwill) – Liabilities
29. “Goodwill is a thing very easy to describe, very difficult to define. It is the benefit and advantage of good name, reputation and connection of a business. It is the attractive force which brings in customers. It is one thing which distinguishes an old established business from a new business at its start.” definition ginen by…
(a) Lord Macraughton
(b) Lord Eldon
(c) Lord s.l paul
(d) Lord d.pola
Answer- (a) Lord Macraughton
30.Why is goodwill considered to be an intangible asset and not a fictitious asset? because of
(a) Goodwill can be realized
(b) Goodwill can be sold
(c) Goodwill has value
(d) All of these
Answer- (d) All of these
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